Global technology stocks are starting to look good value as a result of the global slowdown, accor...
Global technology stocks are starting to look good value as a result of the global slowdown, according to Hugh Priestley, chief investment officer at Rathbones.
Priestley is upping his weightings in the global technology sector, believing prices are rapidly bottoming out, providing a good buying opportunity.
Priestley says: "Over the past six months we have been reducing our exposure to tech, media and telecoms but over the past fortnight or so, we have been heading back to stocks in that area. We are getting near the bottom in some of these stocks."
Equity analysts are behind the curve in their upgrading of these stocks and were likewise behind in their downgrading of tech stocks, says Priestley, who believes many companies in the sector will outperform analyst's expectations.
He adds: "Some growth stocks in the sector are now on cheaper multiples than defensives, particularly the semiconductor companies."
Looking at the US market as a whole, Priestley believes that while it is teetering on the brink of recession, it is not there yet.
Haydn Davies, economist at Barclays Global Investors, is very cautious about the US but is even more downbeat about the UK.
He says: "The UK has been our least favourite market for some time. Sentiment here is very weak both from equity analysts and company directors selling their own shares."
While Davies acknowledges that exports have been positive in the UK of late, he believes the economic slowdown, coupled with fallout from the foot and mouth crisis, will have a negative bearing on domestic equities.
The foot and mouth crisis could bring about opportunities for companies involved in meat testing and vegetarian foodstuffs, Priestly believes.
He says: "Given the current concerns about meat, companies who test for things in food that should not be there, like Eurofins, might do well.
"Companies involved in preparing fruit and vegetables, like Bonduell, should benefit as well."
While Davies is bearish about the UK, he believes Euroland presents greater investment opportunities.
He said: "We like Europe, it is a port of calm in turbulent seas. We haven't seen profit warnings like we have in the US and the macroeconomic environment is very positive, though it will be affected by the downturn in the US."
Priestley is also more bullish about Europe than the UK, although he is not keen on the euro. "Prices have fallen a bit more in Europe than they have here, but the euro is an unexciting currency," he says.
Priestley is more bullish about Japan however, in light of the forthcoming prime ministerial elections.
"On Japan, I'm more inclined to be positive than negative. It could be a wildcard," he says. "They still have enormous problems but things are changing. Of the four prime ministerial candidates, one is a bit of a maverick who says it is time to change things. He seems to be getting the popular vote, so we'll see what happens."
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